Construction loan and progress payments
A construction loan is drawn in stages as a build progresses, with the lender paying the builder at each stage (slab, frame, lock-up, fixing, completion) against a fixed price building contract.
Construction loan and progress payments, explained.
Interest is charged only on the amount drawn, so repayments start low and rise with the build. Most lenders require a registered builder, a fixed price contract, council-approved plans and progress inspections before each payment.
Variations and owner-supplied items are the usual causes of a funding gap, because the lender funds the contract, not the wish list. Knockdown-rebuild projects add the demolition and the period without a home to the plan.
Tools that use this term.
What will the repayments be?
Loan repayments calculator: principal and interest, interest-only for a period, weekly or monthly, with or without extra repayments.
OpenToolDoes the project stack up?
Development feasibility calculator: before a lender, a valuer or a quantity surveyor looks at a project, a developer needs a first answer to one question: what margin is left after every cost, including the cost of the money.
OpenLonger reads from the archive.
When the reading raises a question, ask it.
A finance review starts with a conversation and a written position from Dayan Kasturiratna, who provides the credit assistance on every file. No credit check to start.
The Learn section is general information about lending in Australia. It does not take account of your objectives, financial situation or needs, is not credit assistance, and is not tax, legal or financial advice. Lender policies, government schedules and regulations change; check the current position with the relevant body or with us before relying on it.
